ACIT, New Delhi V. M/s. S Chand & Co. Ltd., New Delhi

ITA 1870/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5817 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH . K. N. CHARY , JM ITA NO. 1870/DEL/2015 : ASSTT. YEAR : 2011 - 12 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 22(2 ) , NEW DELHI VS M/S S CHAND & CO. LTD., 7361, RAVINDRA MANSION, RAM NAGAR, NEW DELHI - 110055 (APPELLANT) (RESPONDENT) PAN NO. AAA CS1149M ASSESSEE BY : SH. V. K. BINDAL , CA & SMT. SWEETY KOTHARI, CA REVENUE BY : SH. K AUSHLENDRA TIWARI , SR. DR DATE OF HEARING : 09.04 .201 8 DATE OF PRONOUNCEMENT : 27 . 06 .201 8 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 12.01 .2015 OF THE LD. CIT(A) - 8 , DELHI . 2. THE ONLY E FFECTIVE GROUND RAISED IN THIS APPEAL READS AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.2,10,19,480/ - ON ACCOUNT OF VALUATION OF CLOSING STOCK. 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2011 DECLARING AN INCOME OF RS.10,19,63,962/ - . LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO MADE THE ADDITION OF RS.2,10,19,480/ - ON ACCOUNT OF VALUATION OF CLOSING STOCK BY OBSERVING IN PARA 3.5 OF THE ASSESSMENT ORDER DATED 18 .03.2014 AS UNDER: 3.5 IN THE AY 2004 - 05, THE ASSESSING OFFICER CONSIDERED THE VALUE OF SLOW MOVING AND OBSOLETE STOCK @ 25% OF THE ITA NO. 1870 /DEL /201 5 S CHAND & CO. LTD. 2 TOTAL STOCK AND VALUED THE STOCK ACCORDINGLY BUT THE COST OF STOCK WAS ACCEPTED @ 30% OF THE PRINTING PRICE. IN AY 2005 - 06 TO 2010 - 11 (EXCEPT AY 2006 - 07), THE CATEGORIZATION OF BOOKS AS SUBMITTED BY THE ASSESSEE WAS ACCEPTED. HOWEVER, THE ADDITION WAS MADE @ 2% OF THE PRINTED PRICE OF BOOKS ON ESTIMATED BASIS IN THE AY 2005 - 06 TO 2010 - 11 EXCEPT 2006 - 07. IN THE AY 2006 - 07, THE ADDITION WAS MADE BY THE ADOPTING THE COST OF THE BOOKS @ 31% OF THE PRINTED PRICE. HENCE, KEEPING IN VIEW THE PAST HISTORY AND A POSSIBILITY OF SALES OF SOME STOCK BEING WRITTEN OFF DURING THE YEAR IN THE SUBSEQUENT YEARS, I HEREBY MADE AN ADDITION OF RS. 2,10,19,480/ - BEING 2% OF RS.102,09,74,017/ - BEING THE PRINTED PRICE OF THE BOOKS AS ON 31/03/11. 4 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO DELETED THE ADDITION FOR THE REASON THAT SIMILAR ADDITIONS WERE DELETED BY THE ITAT FOR THE ASSESSMENT YEARS 2004 - 05 TO 2011 - 12. THE RELEVANT FINDINGS HAVE BEEN GIVEN BY THE LD. CIT(A) IN PARA 3 OF THE IMPUGNED ORDER WHICH READ AS UNDER: 3. I HAVE CONSIDERED THE ASSESSMENT ORDER; WRITTEN SUBMISSIONS FILED BY THE LD. AR OF THE APPELLANT AND ALSO PERUSED THE ORDER PASSED BY THE HON'BLE ITAT FOR EARLIER YEARS. I AGREE WITH THE ARGUMENTS OF THE LD. AR THAT INCREASING THE VALUE OF CLOSING STOCK IN ONE YEAR BY CHANGING THE ACCEPTED METHOD OF ACCOUNTING AND THEN SUBSTITUTING ITS VALUE AS OPEN ING STOCK OF NEXT YEARS LEADS TO A REVENUE NEUTRAL EXERCISE AND THE REVENUE GETS N O ADVANTAGE OUT OF THE SAME. IT APPEARS FROM THE ASSESSMENT ORDER WHICH IS REPRODUCED ON PAGE 2 OF THIS ORDER THAT LD. ASSESSING OFFICER VALUED THE CLOSING STOCK BY METHOD A, B & C. IT IS NOT A CORRECT METHOD OF VALUING THE CLOSING STOCK OF THE APPELLANT. AS PER ACCOUNTING STANDARD, APPELLANT HAS TO FOLLOW THE VALUATION OF CLOSING STOCK REGULARLY. FROM THE AY 04 - 05 TO AY 11 - 12, VARIOUS LD. AOS HAVE ADOPTED 3 METHODS F OR VA LUING THE CLOSING STOCK. HOWEVER, THESE METHODS OF VALUATION HAVE BEEN REJECTED BY THE HON'BLE ITAT IN VARIOUS YEARS. SINCE THE ADDITION MADE ON THE VALUATION OF THE CLOSING STOCK IN THE AY 05 - 06, IS DELETED BY THE HON'BLE ITAT, THE VALUATION ADOPTED BY THE LD. ASSESSING OFFICER ON THE BASIS OF AY 05 - 06 IS NOT VALID. RESPECTFULLY, FOLLOWING THE JUDGMENT OF HON'BLE ITAT IN THE CASE OF APPELLANT, I HOLD THAT LD. ASSESSING OFFICER HAS WRONGLY DISTURBED THE VALUATION OF CLOSING ITA NO. 1870 /DEL /201 5 S CHAND & CO. LTD. 3 STOCK DISCLOSED B Y THE APPELLANT. HENCE, THE ADDITION MADE BY THE LD. ASSESSING OFFICER IS HEREBY DELETED. THE PRAYER MADE BY THE LD. AR OF THE APPELLANT IN PARA 4 AND 5, ARE REJECTED ACCORDINGLY. 5 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. SR. DR REITERATED THE OBSE RVATIONS OF THE AO AND STRONGLY SUPPORTED THE ASSESSMENT ORDER DATED 18.03.2014. 6. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND FURTHER SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED BY THE VARIOUS ORDERS OF THE ITAT FOR THE ASSESSMENT YEARS 2004 - 05 TO 2010 - 11 (COPIES OF WHICH ARE PLACED AT PAGE NOS. 1 TO 60 OF THE ASSESSEE S PAPER BOOK). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT THE LD. CIT(A) DELETED THE IMPUGNED ADDITION BY FOLLOWING THE EARLIER ORDERS OF THE ITAT FOR THE ASSESSMENT YEARS 2004 - 05 TO 2011 - 12. DURING THE COURSE OF HEARING NOTHING WAS BROUGHT ON RECORD THAT THE EARLIER O RDERS OF THE VARIOUS BENCHES OF THE ITAT WERE REVERSED BY THE HIGHER FORM. WE, THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) , PARTICULARLY WHEN THE SIMILAR ISSUES RELATING TO THE ADDITIONS MADE BY THE AO HAD BEEN D ECIDED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS BENCHES OF THE ITAT IN ASSESSEE S OWN CASE AS PER THE FOLLOWING DETAILS: SL. NO. ITA NOS. ASSESSMENT YEAR DATE OF ORDER 1. 4747/DEL/2007 & 79 & 1864/DEL/2008 2004 - 05 & 2005 - 06 29.01.2010 2. 2250/DEL/2008 20 05 - 06 01.12.2009 3. 2815/DEL/2010 2006 - 07 10.05.2011 4. 2809/DEL/2010 2007 - 08 25/08/2010 5. 302 & 303/DEL/2013 2008 - 09 & 2009 - 10 26/03/2013 6. 5570/DEL/2013 2010 - 11 26/04/2017 ITA NO. 1870 /DEL /201 5 S CHAND & CO. LTD. 4 8. IN VIEW OF THE ABOVE, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEP ARTMENT. 9 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. (ORD E R PRONOUNCED IN T HE COURT ON 27 /06 /2018 ) SD/ - SD/ - ( K. N. CHARY ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 27 /06 /2018 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR